BC Rail team wasn't surprised bidder raised offer
Published Wednesday, September 15, 2010 7:07PM PDT
A four-person team evaluating potential buyers of BC Rail's assets didn't give "much consideration" when one bidder suddenly bumped its offer by millions of dollars to nearly match the undisclosed bid of a rival purchaser, a political corruption trial heard Wednesday.
Witness Brian Kenning, a member of the evaluation committee, was asked by defence lawyer Kevin McCullough if the committee ever discussed why the new bid by OmniTrax, drawing them about equal to the CN Rail-CP Rail-Vancouver Port Authority consortium of bidders, came about.
"Did that not strike you as odd?" McCullough asked the witness in B.C. Supreme Court.
"We knew this group really wanted the bid, as to what prompted them to increase it. ... I don't think we spent a lot of time thinking about it. Sometimes people do that," Kenning replied.
McCullough asked if the group purposely overlooked possible reasons behind the increased offer.
"Was that perhaps because the leaking of confidential information in this manner was something you knew was occurring, and that's why it didn't seem odd to you that they were increasing their bid?" he asked.
"That's totally incorrect," Kenning said.
Kenning agreed he signed a letter in March 2004 recommending the auction of the Roberts Bank spur line be cancelled.
But Kenning said the spur line deal's termination wasn't related to the $4-million jump in offer presented by Denver-based OmniTrax.
The spur line, or shorter track, was meant to be sold after the Crown corporation sold the main rail line for $1 billion.
McCullough pointed out the new bid, which arrived a week after second round offers on the short track were already submitted, came several months after his client was suspended with pay following a December 2003 raid on the British Columbia legislature.
"They were trying to put this on him," McCullough said of accusations Bobby Virk and another former government employee passed on confidential documents to OmniTrax.
Virk and Dave Basi are in the midst of the lengthy trial for those allegations, which relate to the earlier sale of BC Rail's main freight line. They're accused of taking bribes like cash, meals and NFL tickets.
The two former ministerial aides are charged with fraud and breach of trust. Both political appointees, Virk worked in then-transportation minister Judith Reid's office, while Basi worked for then-finance minister Gary Collins.
They were charged about a year after Mounties executed search warrants at the legislature, carting away dozens of boxes of documents related to the transaction. Basi's cousin Aneal is also on trial, charged with money laundering.
Kenning told court the committee ended the spur line sale before it was complete because they recognized there was no longer a level playing field for buyers. He didn't elaborate on what the issue may have been.
McCullough showed the witness an email sent three months before the request for proposals on the much earlier freight line sale went out.
"Confidentiality is a great concept but I won't totally bet on it," BC Rail chairman John McLernon wrote to the committee, the witness read to the jurors.
The pair disagreed about exactly what that might mean in relation to the sale process, but Kenning conceded it was "entirely possible" Virk had been given permission to distribute confidential information on the sale to the premier's office, cabinet ministers and 70-MLA Liberal caucus.
Virk attended meetings of the evaluation committee about the freight line sale before the raid on the legislature.
Earlier in testimony, court heard that in the years after BC Rail had stopped running trains, the company spent nearly $150,000 on the Vancouver Canucks and BC Lions.
Kenning, who was also chairman of BC Rail's financial audit committee, couldn't recall the specifics of the spending on the sports teams, but thought some of it might be for tickets.
Presented with financial documents, the witness confirmed it spent more than $72,000 on Vancouver's hockey team in 2004, $29,000 on the city's football team in 2005 and another $45,000 on the Canucks in 2006.
Court heard BC Rail shrank in size after the privatization, leaving executives to manage the 40-kilometre spur line that was never sold.
But court was told that during that time, president Kevin Mahoney was billing for items including a golf club membership, lunches and vehicle allowances.
"It was a term of his engagement and it was as they call it a perk that was given to him at the time. Many executive officers at many, many companies have a number of perks," Kenning said.
McCullough asked whether Kenning and the other directors -- who recommended to the government it sell the railway shortly after promising not to during the election campaign -- did so because they were following political orders.
"There were no marching orders, period. I don't know how else to say it," Kenning answered.